Equity Bank's net profit grew by more than a fifth in the half-year period ended June 30, buoyed by growth in its loan book and agency banking.
The lender, Kenya's second largest by market share, has returned an after-tax profit of Sh7.66 billion in the six months compared to Sh6.31 billion, a 21.4 per cent increase.
Its loan book grew by 23.9 per cent to Sh186.51 billion from Sh150.48 billion in a comparable period a year ago. This pushed up interest income to Sh16.97 billion from Sh15.71 billion a year ago, a much slower growth of eight per cent.
"This was because interest rates much lower in the period, but our diversification of income sources increased 'other income'," said James Mwangi, the managing director.
Customer deposits grew by 15.3 per cent to Sh214.53 billion compared to Sh186.02 billion a year ago. Equity Bank had the highest number of deposit accounts in the banking sector (33.9 per cent of total) as at December 31.
"Our non-funded income contributed about 21 per cent to our net income. Diversification is coming in handy to support the bank's growth," said Mwangi.
"Our agency network helped reduce the cost of delivery. We will see Finserve contributing to our margins soon."
The bank's subsidiary, Finserve Africa Ltd, was licensed as a mobile virtual network operator (MVNO) by the Communications Authority of Kenya in April. Equity will offer banking and mobile money transfer services via Finserve.
Equity said it may call for cash from the market if growth outpaces its pace of retaining earnings over the next two years.
Its ratio of core capital to total risk weighted assets declined to 14.1 per cent in the six months compared to 15 per cent in the first half last year, but still above the minimum statutory requirement of 10.5 per cent.
"We are comfortable for this year but the future may generate faster growth than we can retain earnings, considering ongoing public infrastructure projects. We see ourselves coming into the market in two years' time to seek more capital," Mwangi said.